Telefónica Quarterly Results 2008 January - December

Thursday, February 26th, 2009 
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MADRID — The strong rise in organic revenues reflects Telefónica (Madrid and NYSE: TEF)’s success in capturing growth in its markets in 2008. As a result, the intense commercial activity recorded in 2008 enabled it to increase total accesses by 13.2% versus 2007 to around 259 million. This growth was driven by the increases in wireless (+16.6%), broadband (+20.9%) and pay TV (+29.7%) accesses. By region, the contribution by Telefónica Latinoamérica is especially noteworthy, with over 158 million accesses across the region at the end of December (up 18.0% on December 2007).

Pay TV accesses stood at over 2.2 million at the end of 2008, up almost 30% on the prior year, driven by net adds of 109,500 in the fourth quarter and some 519,500 in the year. At the end of 2008 the Company offered pay TV services in Spain, the Czech Republic, Peru, Chile, Colombia, Brazil and Venezuela.

Telefónica Group Accesses – Unaudited figures (thousands):

              January - December
         -----------------------
            2008     2007  % Chg
         -------  -------  -----
Pay TV   2,267.5  1,748.1   29.7

Telefónica España (Spain)

Telefónica had an estimated 14% share of the Pay TV market at year-end, having added 22,943 customers in the fourth quarter and 101,407 in 2008, leading to a total of 612,494 customers (up 19.8% year-on-year).

The total number of Duo and Trio bundles stood at 4.5 million units. This means that more than 85% of the Company’s retail broadband accesses were part of a double or triple offer bundle.

Spain subscribers (thousands):

               2007                                        2008
          ---------  ------------------------------------------
           December      March       June  September   December  % Chg y-o-y
          ---------  ---------  ---------  ---------  ---------  -----------
Pay TV        511.1      554.0      576.6      589.6      612.5         19.8

Telefónica Latinoamérica

In pay TV, Telefonica Latinoamérica already has over 1.5 million subscribers, with operations in Peru, Chile, Colombia, Brazil and Venezuela, up from 1.2 million in December 2007.

Latin America Pay TV Subscribers (thousands):

                2007                                        2008
           ---------  ------------------------------------------
            December      March       June  September   December  % Chg y-o-y
           ---------  ---------  ---------  ---------  ---------  -----------
Brazil         230.9      282.3      346.9      426.1      472.2        104.5
Chile          219.9      231.6      240.8      250.9      263.0         19.6
Peru           640.0      633.4      653.2      646.0      654.5          2.3
Colombia        72.9       93.0      112.6      137.5      142.3         95.1
Venezuela        0.0        0.0        0.0        0.0        8.5         n.m.
           ---------  ---------  ---------  ---------  ---------  -----------
  Total      1,163.8    1,240.4    1,353.6    1,460.5    1,540.5         32.4

Telesp (Brazil)

Telesp had 15.8 million accesses at the end of 2008, having doubled its pay TV accesses to 472,200 and captured the growth of the broadband market (+23.6% year-on-year to 2.6 million accesses). Fixed-line accesses registered a slight year-on-year decline of 2.5%.

In 2008 Telesp further developed its broadband services portfolio and now offers speeds ranging from 1Mb to 30Mb. At its pay TV business the Company rolled out an outstanding content offering.

Telefónica Chile

Telefónica Chile achieved 16,391 net adds in the broadband market in the fourth quarter, bringing the full-year total to 70,565. Telefónica Chile managed 716,562 broadband accesses in December 2008, up 10.9% from 2007. Regarding Pay TV, accesses totalled 262,957, an increase of 19.6%.

Telefónica del Perú

The growth pace of Dúo and Trío net adds accelerated in the fourth quarter, partly due to the improved basic TV offering and the start of the digitalisation process for premium customers in Lima. These will see the number of channels increase from 87 at present to 107.

Telefónica Telecom (Colombia)

Telefónica Telecom managed over 2.8 million accesses in December 2008, up 9.2% from 2007, driven by the increase in broadband (+96.7% year-on-year) and Pay TV (+95.1% year-on-year) accesses.

Thanks to its bundling strategy the Company was able to capture growth in the broadband segment and stimulate the Colombian Pay TV market. Net adds in Pay TV totalled 69,388 in 2008, with 4,810 registered in the fourth quarter.

Telefónica Venezuela

In the fourth quarter the Company focused on developing its service portfolio, highlights of which include the launch of pay TV service at a nationwide level via DTH satellite technology in October and the launch of 3G mobile broadband service in December, starting in the Gran Caracas area.

Telefonica Europe

Telefónica O2 Czech Republic

The total number of O2 TV customers increased by 41,331 in 2008 and by 6,435 in the quarter to reach 114,496 at the end of December.

Europe Pay TV Subscribers (thousands):

                     2007                                        2008
                ---------  ------------------------------------------
                 December      March       June  September   December  % Chg y-o-y
                ---------  ---------  ---------  ---------  ---------  -----------
Czech Republic       73.2       87.2       97.9      108.1      114.5         56.5

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